MODERN

TRADE
LANDSCAPE
 TABLE OF
03 Credit
04 About us
CO N T E N T S
07 Scope of the report
12 Chapter 1: Vietnam at a glance
Geographics 13

Demographic 14

Vietnam’s economy 18

19 Chapter 2: Vietnam’s retail lanscape

Overview 20

The retail distribution channel 21

Some trends 22

Consumer landscape 23

Market share 24

25 Chapter 3: Modern trade is emerging

Traditional trade 26

VinShop breathes fresh air into traditional retail market 28

Modern trade 33

Modern Trade: KEY TO FUTURE GROWTH 44

47 Conclusion

02
CREDIT
Bui Tan Co

Le Yen Giang

Nguyen Thi Kim Ngan

Pham Duy

Le Khac Minh Nguyen

Bui Minh Nguyen

Luong Cong Quynh

Nguyen Hong Gia Han

Doan Quang Binh

Ho Hoa Binh

Ly Bao Chuong

03
About us

/lscftu2/
/lscftu2.com/

04
About us

LSC
L ogistics Studying Club takes pride in being the sole pioneer club of Foreign
Trade University in motivating and supporting students who share the same
passion for Logistics and Supply Chain. Since its foundation in August 2014,
Logistics Studying Club, along with its mission to become the professional
organization specializing in Logistics and Supply Chain, has greatly taken the
lead in holding programs on specialized talents access the most updated
knowledge of the field. Together with the slogan “Ship your dream”, Logistics
Studying Club is the place to take wings for the passion of young students and
help Vietnam become part of top human resources suppliers.

O riented towards developing Logistics Studying Club into a leading orga-

nization, student community in Logistics & Supply Chain Management in Ho
Chi Minh City.

E xternal Orientation: Increasing the rcognition of the Logistics Studying

Club in the same industry and universities in Ho Chi Minh City.

Internal Orientation: Towards “Standardization” and “Adaption” culture of

Logistics Studying Club

05
About us

SCMission

S CMission Contest, which is a contest about data analysis and solving

business cases, is organized for nationwide students (who have a passion for
Logistics and Supply Chain management).

Coming back with Season 4, the competition will bring practical business
cases (related to Supply Chain) which requires the participants to apply the
knowledge and skills to have outstanding solutions.

Therefore, bringing both overall and detailed views the major as well as
being well-equipped with the necessary knowledge and skills realted to the
major for students.suppliers.

With careful research and preparation, SCMission

Contest season 4 will be back with a promise to be
outstanding as well as impressive.

/scmissionlsc/

06
Scope of the report
Current status
of Vietnam’s economy
I n recent years, Vietnam has always
been one of the countries with the high-
est economic growth rates in the
region. In 2019, Gross Domestic Product
(GDP) of Vietnam grew by an estimated
7%, this growth rate is one of the fastest
paces over regional countries at similar
levels. Because of its deep integration
with the global economy, the fact that
Vietnamese economy has been hit hard
by the ongoing COVID-19 pandemic is
inevitable, however, Vietnam has shown
remarkable resilience. The initial health
impact of the outbreak in Vietnam had
not been as severe as in other countries
due to proactive measures at the
national and subnational levels. The
macro-economic and fiscal framework
remains resilient with an estimated
GDP growth rate of 1.8 percent in the
first half of 2020, projected to reach 2.8
percent for the year. Vietnam is one of
the few countries in the world not to
expect a recession, though its growth
rate for this year is far less than the typi-
cal 6-7 percent pre-crisis projections.
Even though COVID-19 causes a lot of
damage to the economy and other
aspects, we see a lot of bright spots and
hopes in such difficult situation.
07
 Scope of the report

When the pandemic first broke out in January 2020, flights to and from Wuhan
were cancelled. By late March, borders were virtually shut altogether. And at the
same time, testing, aggressive contact tracing and a mass multi-aspect public
health campaign were quickly mobilised. The government has also taken full
advantage of all kinds of media platforms, SMS,... to spread news about the
date-to-date numbers of patients, places of quarantine. They even composed a
song about Covid-19. All of the above were carried out for the sake of raising
people’s awareness of the damage that would be inflicted upon our society as a
whole.

In general, the survey conducted by Nielsen showed that Vietnamese

consumers are highly aware of the source and symptoms of COVID-19.
65%
According to the data collected, 65% of the total respondents
35%

follow news updates of the disease multiple times per day.

Remarkably, the top three information sources are social media,
65% text messages from the Ministry of Health (SMS) and TV news.

Information source

TV news 78

Text messages - SMS 79

Social medias 82

0 20 40 60 80 100
Percentage of usage

Source: various sources of online newspaper + Nielsen news 08

Scope of the report
T he COVID-19 pandemic made
the Vietnamese economy face
many difficulties and challenges,
but in addition, it also brought
many opportunities to help devel-
op a stronger economy. While
social distancing makes it difficult
to buy directly, it has created
favorable conditions for the devel-
opment of e-commerce. The de-
velopment of domestic e-com-
merce channels helps businesses
expand their market size and,
moreover, regain the market from
the hands of foreign giants. The
period affected by the COVID-19
pandemic is an opportunity to
help businesses test their stamina
and adaptability to the new situa-
tion, self-assess their production
and business status, strengths,
weaknesses and
competitive advantage. Based on
previous self-assessment bases,
businesses can self-adjust as well
as improve their business models,
development strategies towards
more efficient and sustainable.
And thanks to effective anti-epi-
demic measures, Vietnam has
become a safe and reliable country
for foreign investors when they are
reallocating capital flows in the
world and especially the trend of
corporations in the world to move
their factories out of China. In addi-
tion, with a large workforce and
cheap labor, good infrastructure,
geographic location near China,
Vietnam will be paid more and
more attention by corporations
wishing to move. Noticeably,
modern trade seems to have more
opportunity to grow in this context.
09
Scope of the report

W ith COVID – 19, a considerable number of consumers have been

encouraged to making their first transaction although they typically
do not purchase goods online or in convenience stores. According to
the survey conducted by Nielsen, more than 50% of respondents have
said that they have changed their buying habits of paying visits to su-
permarkets, grocery stores and wet markets. As a result, both online
and convenience store purchases reached their highest point in terms
of shopper base during March 2020. As for convenience stores, this
brings an opportunity to take advantage of the growth momentum to
foster expansion by increasing penetration rates among new consum-
ers and investing to maintain their loyalty even after a pandemic. In
addition, large modern trade formats – including hypermarkets and
supermarkets – have been outpacing that of traditional trade formats.
During this time, Vietnamese consumers go to hypermarkets and su-
permarkets more frequent than before, making a purchase every 10
days on average. Another noticeable point is that modern trade retail-
ers witness a surge in demand in other channels with telephone
orders or visits to their e-commerce platform increase significantly.

10
Scope of the report

I n a survey conducted by Nielsen, in conjunction with Infocus

Mekong Mobile Panel on February 21 2020, 25% of respondents said
that they have switched to the form of buying online and have
reduced their out-of-home consumption occasions. This suggests
an overall shift towards greater omnichannel shopping which may
persist after the pandemic subsides.

“ Vietnamese now are spending more time

online and are also shopping more online. This
provides an opportunity for marketers to be ag-
gressive with their digital strategies and should
have a stronger and visible presence online
Mohit Agrawal, Head of Consumer Insights,
Nielsen Vietnam.

This report will present notable news about Vietnam's retail

market related to the shift from traditional trade to modern trade
in many ways, along with a deeper look at the operating systems
and the suitability of modern trade’s characteristics with the
market requirements as well as the current development of distri-
bution channels in modern trade.

11
 Chapter 1

VIETNAM
AT A GLANCE
Geographics
Demographics
Vietnam’s economy

08
Chapter 1 Geographics

Southeast Asia
East side of Indo
Peninsula

C.Hanoi

Red River
Delta

#66
largest country

331,210

Mekong
River Delta

13
 Chapter 1 Demographics

(3)

98.7M
Vietnam’s population

2021 In early

Yearly Global
15
(5) Expected to be
Change Share rapidly increasing
up to 110 million
by 2050 (7)
193

1.25%
1.25%
(6)
Increased by
0.91% over the
last year. (4) Global of the world
total popula- Projection
rank tion

Source: Worldometer 14
Chapter 1 Demographics

The change of population by 2015-2020

2020 97338

2019 96484

2018 95385.2
year

2017 94286

2016 93250.7

2015 92228.6

88000 90000 92000 94000 96000 98000

Thou. pers

(8)

“ Vietnam’s population is ageing at the pace

FASTER than any of its regional peers. ”
Worldbank

15
Chapter 1 Demographics

Population pyramid of 2020

55.5% of the population is under 35

years of age
2019 Population Census Report

Rank #1 in the list of regions

at similar income levels

Middle class currently accounting for 13%

of the population, is expected to reach 26% by 2026
Worldbank

16
Chapter 1 Demographics

URBANIZATION

The ratio of urban population of Vietnam

to the rural one by 2018-2020 (cre. GSO)

Vietnam is fore-
casted to undergo
37.73%
significant urban-
35.05%
ization in the near
34.22% future, even
though it remains
Remark: 65.78%
predominantly
2018 Inner circle
64.95% rural
2019 Middle circle
62.27%
2020 Outer cirle

Proportion of Urban Proportion of Rural

Ratio of forecasted urban population of Vietnam

in 2030 to the rural one

By 2030, the urban

population is fore-
casted to increase
43.00% by 27% from 2017,
reaching 45.66
57.00%
million people or
43% of the total
population of Viet-
nam. (cre. UNDP)

Proportion of Urban Proportion of Rural

17
Chapter 1 Vietnam’s economy

Growth rate of GDP in period

2010-2019
7000000
GDP’s growth rate
6000000
in 2019 is at a simi-
5000000 lar pace to 2018,
Bill. Dong

4000000
estimated 7%
3000000 and was one of
2000000 the FASTEST
1000000 growth rates in
the region.
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 Prel.
2019
Year
Source: GSO

GDP Growth rate of 6 ASEAN Countries in 2020

10

Q1 Q2 Q3 Q4 GDP of year
0
Percent

-5

-10

-15

-20

Philippines Thailand Malaysia Singapore Indonesia Vietnam

Vietnam is one of the few countries in the world not to expect a recession
GDP in nine months of 2020 increased by 2.12% (an increase by 3.68% in the
first quarter; 0.39% in the second quarter; and 2.62% in the third quarter) GDP
in the Q3 of 2020 is estimated to increase by 2.62% over the same period last
year, which is the lowest increase of every third quarter in the period 2011-2020
GDP in the Q3 of 2020 is estimated to increase by 2.62% over the same period
last year, which is the lowest increase of every third quarter in the period
2011-2020 GSO

18
 Chapter 2

VIETNAM’S
RETAIL LANDSCAPE

Overview
The Retail Distribution Channel
Some Trends
Consumer Landscape

Market Share

19
Chapter 2 Overview

Retail Sales of goods and services

6000 Retail Sales of

5000 goods and ser-
vices of Vietnam
VND trillion

4000
increased steadily
3000
in recent years,
reaching 4940
2000

1000
VND trillion in
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2019.
Source: statista

With the onset of the COVID-19 pandemic, domestic demand for consumer goods saw
its lowest growth rate since 2014 at 9.8% in the first two months of 2020, compared to
14.4% for the same period last year. In the third quarter of 2020, retail sales of goods and
services decreased by 0.1% year-on-year, compared with -12% in the second quarter due
to the effects of the COVID-19 pandemic. By September 2020, the industry's total
revenue fell to 40 billion US dollars, down 2% year on year. After the second COVIDE-19
wave, growth in July decreased 5% from the previous month, increasing to 2% in August
and 11% in September. In overall, revenue from Vietnam’s retail market in 2020 reaches
$172 billion, according to the General Statistics Office (GSO). Such growth rate, while
remaining lower compared to the 12.7% witnessed in the previous year, is a good sign for
the business community in the context of a drop in retail sales in the global retail market
during the pandemic. In addition, Vietnam is expected to build on the momentum of
rapidly expanding the retail sector, with continuous annual growth over the past
decade. In particular, consumer sentiment remained optimistic despite COVID-19, with
Vietnamese consumers ranked the most optimistic globally.

Market size + Growth rate

200 14.00%
12.00%
150 10.00%
Bill. USD

8.00%
100
6.00%

50 4.00%
2.00%
0 0.00%
2016 2017 2018 2019 2020

Market size Growth rate

Source: GSO

20
Chapter 2 The retail distribution channel

Hotel

On-premise Restaurant

Catering

Distribution Traditional Wet Market

Channels Trade

Grocery
Store

Hyper/
Supermarket
Off-premise

Convenience
Store

Modern Minimart &

Trade Food Store

Mom & Kid

Store
E - commerce

Modern Drug
Store

21
 Chapter 2 Some trends

Traditional retailing
remains important and
continues to dominate The two main trends in
despite growing urban the retail industry:
demand for modern
formats Small scale store (minimart,
convenience store)
Traditional trade: 1.5 million
retail outlets - 25K Semi Retail- Omnichannel
ers (source: Nielsen)
Modern trade develops rapidly
(+18.5% 2019) (source: Info-
graphic designed by MBA

M&A
E-commerce maintains There have been growing
dynamic expansion
M&A activities in the
39.9 million online shoppers in retail sector in the last four
2019 or five years
(source: we are social & Hootsuite)
Central Group’s acquisition of
Gross Merchandise Value the Big C supermarket chain
(Billion USD)
Vingroup acquiring Fivimart
2019 2.94 and Shop & Go
2018 2.27
2017 2.19 Saigon Co.op taking over
2016 1.8
French retailer Auchan’s Viet-
0 2 4 nam operation
source: we are social & Hootsuite

Promotion is one of the main

motivations of online shoppers

22
 Chapter 2 Consumer landscape

Change in consumption expenditure due to COVID-19 outbreak

among Vietnamese in 2020 compared to 2019, by sector
25%

Health care products and services

20%

Packaged food and beverages

Entertainment and dining out

15%

Household care products

Personal products
Home appliances

Communications
10%

Education
5%

0%
Online shopping/delivery/etc

Transportation

Household utilities

-5%

-10%

-15%

-20%

-25%
Source: Staststa

Despite COVID-19, Vietnam is in the top 2 most optimistic countries

in the world in Q2/2020

Consumer Confidence Index Health continued to be #1

140
123 concern among Vietnamese
117 113
120
102 consumers, with the highest
100
level globally.*
80

60

40
Vietnamese consumers
20
significantly reduce
0
spending spare cash.*
India Vietnam Philippines Indonesia

(*) Source: The Conference Board® Global Consumer Confidence™ Survey

in collaboration with Nielsen 23
 Chapter 2 Market share

MARKET SHARE BETWEEN

MODERN TRADE AND TRADITIONAL TRADE (2019)

75% 25%

Traditional trade Modern trade

MARKET SHARE OF COVERAGE

2018

6%

Modern trade
Traditional trade

94%

2019

20%

Modern trade
Tradi�onal trade

80%

Source: Nielsen 24
 Chapter
Chapter 3
1

Modern Trade
IS EMERGING
Traditional Trade
VinShop Breaths Fresh Air
Into Traditional Retail Market

Modern Trade
Modern Trade: KEY TO
FUTURE GROWTH

25
 Chapter 3 Traditional trade overview

Until Sep’19, TT stores accounted for 86% of the total number of stores
which were operating in Vietnam and its growth rate exceeded 5% com-
pared to the previous year’s figures. TT continued to dominate Vietnam’s
market with about 25K Semi Retailers and 1.5M Retail Outlets, which was
more than 0.2% in perspective of the year before.

Although the domination of TT still existed, TT universe started to take a

downward trend as the total stores in Vietnam showed signs of decline.

Total stores - traditional trade

(2017-2019) -
1500000
1491774 1492568
1490000 1488103

1480000
1474633

1470000

1460000 1457890

1450000

1440000
H1’17 H1’18 H1’19 H1’20 H1’21

Source: Nielsen Pocket Book 26

Chapter 3 Traditional trade overview

Main channels: Wet market and grocery

NUMBER OF WET MARKET 2019

Nothern Highlands
& Mountanous
Ho Chi Minh Cityarea
1415
238
C.Hanoi
Ho Chi Minh City
Ho Chi Minh City 455 238
238
Red River Deltas
1896

Noth Center and

Center Costal Area
2369

Central Highlands
398

Ho Chi Minh City

238

Mekong river delta South East

1677 745

Source: GSO Stastistical Yearbook 2019

According to Deloitte’s survey in 2018, market share of the wet market in

rural and urban areas were respectively 9% and 15%.
While the total number of wet markets is 8500, the number of grocery stores
was much bigger, 1.4 million in 2019, with the total retail sales as 44.26 million
USD.

27
 Chapter 3 Traditional trade overview

Why does wet market still exist at the

crossroad of modernity?

Driver of the trend

Wet markets are widely

available near populous
residential area, which
make them convenient.

Prices at wet market tends

to be lower and bargaining
is widely practised.

Vietnamese have a tenden-

cy to shop daily for food
items to maintain the
freshness.

Wet market allows people

to purchase goods in
smaller quantities, which
is more suitable for a
day-to-day basis.

Source: Deloitte 28
Chapter 3

VinShop breaths fresh air into

Traditional retail market

offer few
choices

few payment the scale is not

options large

Why is the
market share of
traditional trade
gradually
decreased?

require
require a
a direct
mostly base on
transaction
direct trans-
intermediaries
action

unstable
price

29
 Chapter 3 VinShop breaths fresh air into
Traditional retail market

When witnessing the increasing decline in market share of traditional retail

channels, these channels have to face two difficult choices: change or
accept to be in an inferior position. In 2020, one application named “Vin-
shop'' has been launched and opened a new promising era for Vietnamese
grocery stores. With the increasing in number of VinID’s users, VinShop
initially created the B2B2C model - the first in the Vietnamese retail
market; the cooperation between VinShop and VinID through Vinshop is
expected to revolutionize the traditional retail channel, which accounts for
over 80% of the industry's market share.

Apps released on
2/10/2020

10/2020: over 20.000

stores
10/2020
Vinshop Vinshop x VinID about 10 millon
12/2020: about 65.000 B to B to C VinID users
stores

GMV* is expected to
reach 1 bollion USD

(*) GMV: Gross Merchandise Volume

Source: Truong Quynh Phuong _ Chief Commercial Officer & Founding member of One Mount Group _
said in an interview

30
 Chapter 3 VinShop breaths fresh air into
Traditional retail market

The advent of Vinshop opens up many new and

positive directions for “the old” grocery stores.

One of the most important aspects is

enhancing product distribution flow
from the manufacturer to the grocery
store. Thanks to technology, shopkeep-
ers can order hundreds of diverse items
directly from suppliers at once through
the app when sitting at home.

The grocery stores linked to the Vin-

shop application will be arranged in
an orderly, aesthetic and systematic
manner

Involves aggregation of
VINSHOP demand across a diverse
product range

“
Consumers will get many benefits
from the entire process of improving
efficiency with the purchase of prod-
ucts up to 10% cheaper than other
traditional grocery stores due to elimi-
nating unreasonable costs on product.

Consumers will receive many

promotions as well as cashless
payments via e-wallet VinID Pay.

31
Chapter 3
CONCLUSION
T he appearance of VinShop con-
tributes to the changes in the retail
market. Many traditional grocery
stores have become "technology
groceries" and overcome the previ-
ous outdated points, bringing new
vitality to the domestic
market. The launch of VinShop
(B2B) in combination with VinID
(B2C) has created a B2B2C chain
that is considered the biggest high-
light of Vietnam's retail industry in
2020. This mobile application helps
turn a traditional grocery store into
a minimart or convenience store
VinShop breaths fresh air into
Traditional retail market
without spending any extra equip-
ment costs and operating systems,
making it possible for traditional
stores to apply distribution and
logistics systems like a store in
modern trade. Along with the
retail increasing requirements of the
market and consumers about the
price and quality of products, stores
in retail should have a planned and
organized approach to their oper-
ating system to survive like the way
stores in modern trade perform.
32
 Chapter 3 Modern trade

A more planned, organized

and systematic approach
to distribution and logistics
management
They can evaluate
multiple products
side-by-side

Giving the customer a

good buying experience
and value for money

Customer can pick

Modern
and choose the
items and then
proceed to
Trade Involves aggregation of
check-out

demand across a diverse

product range

Clear time-slots
for each product
replenishment

Modern retailers
Often penalize
distributors if the
Balance the delivery time-slot
inventory along is missed or
the economic Maintain their fill delayed
order quantity rate above their
safety stock

33
 Chapter 3 Modern trade

Modern trade is booming rapidly

across store types and driving
the growth of FMCG

19% vs. YA (Oct 19th) 8274 stores (Oct 19th)

Source: Nielsen Source: Nielsen

Small formats are becoming a key growth driver

The number of
Minimart stores in-
creased +63% in 2019
Source: Infographic
designed by MBA An-
drews, IVIO Team

Number of stores in Modern Trade changes significantly

Supermarket Convenience Drug

store strore

↓12% 60% 38%

↓ ↓
Source: Asia Plus inc. Source: Asia Plus inc. Source: Asia Plus inc.

34
 Chapter 3 Distribution channels in
modern trade

Hypermarket Supermarket
a combination of a supermarket refers to a large-scale grocery
and a department store store

Key
players

Greater variety Products Wide variety

Prefer suburban or out- Generally situated

of-town locations Locations near residential areas

Usually looks like a warm, pleasant look,

a warehouse Decora-
tion
and more inviting

Larger Size Large

Discounted rates Price Market rates

35
 Chapter 3 Distribution channels in
modern trade

Hypermarket Supermarket

Bring about savings of

customers Motives Generate profits

Number of outlets (hypermarket) Number of outlets (supermarket)

70 4000
59 58 3450
60 54 56 3500

Number
49 3000
50 2734
41
of 2500 2285
40
2000
30 outlets 1672
1500
20 1032
1000
605
10 500

0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019

1.17 million USD Sales in 2.54 million USD

2019

Sales growth (hypermarket) Sales growth (supermarket)

70.00% 18%

60.00% 16%

50.00% 14%

40.00% 12%

30.00% Sales 10%

20.00% Growth 8%
6%
10.00%
2015 4%
0.00%
2%
2014 2016 2017 2018 2019
-10.00%
0%
-20.00% 2014 2015 2016 2017 2018 2019

Source: Deloitte 36
Chapter 3 Distribution channels in
modern trade

Small retail business that stocks a range of every-

day items: coffee, groceries, snack foods, confec-
Convenience store tionery, soft drinks, tobacco products,
over-the-counter drugs, toiletries, newspapers,
and magazines

Standalone small store

in and around a popu-
lated neighborhood, at
highways, near railway
stations

Assortment
of ready – to
– eat meals

Modern
facilities

Order
smaller
quantities of
inventory at
Longer
higher
open
Charge
per-unit
hours
significantly
prices from Serving higher
wholesalers more prices than
loca- convention-
tions al grocery
stores or
supermar-
kets

Digital
payment
methods

Having
shorter
cashier
lines

37
Chapter 3 Distribution channels in
modern trade

Convenience stores have rapidly proliferate

across Vietnam in recent years:

190 million 18% 0.19 million

Market size Growth rate Sales

Source: “Convenience Source: “Convenience Source: Deloitte
stores in Vietnam”. stores in Vietnam”.
Euromonitor. March 2020 Euromonitor. March 2020

Number of outlets and

growth rate
1400 40%

1200 35%
30%
1000
25%
800
20%
600
15%
400
10%
200 5%
0 0%
2014 2015 2016 2017 2018 2019

Number of outlets Sales growth

Source: Deloitte

MARKET SHARE
Family Mart
21%

Others
49%

Circle K
20%

Source: “Convenience
stores in Vietnam”.
B’s Mart
Euromonitor. March 2020
10%

34
Chapter 3 Distribution channels in
modern trade

Key player:
Vinmart +

Verified Products:
origin the necessary

FOOD
AND
MINIMART

Location: Decoration:
center areas, center classified by prod-
streets, residential uct category
areas ...
Size:
medium

39
Chapter 3 Distribution channels in
modern trade

Key player:
pharmacity
328 stores

Products:
Verified drugs, health-
origin care products ...

MODERN Sales
6.5 billion USD in 2019
DRUGS STORE Source: Business Monitor
International

Location: Decoration:
in mall, center areas, like a traditional
center streets, ... drugstore

Size:
small to
medium

40
Chapter 3 Distribution channels in
modern trade

Revenue growth of key player in

modern drugs store
1200

1000

800
Billion VND

600

400

200

0
2015 2016 2017 2018 2019
Year

Source: Annual report of Pharmacity

41
Chapter 3 Distribution channels in
modern trade

Key player:
concung.com
423 stores

Products:
Verified for baby and
origin maternity

MOM & KIDS Sales

7 billion USD in 2019
STORE

Location: Decoration:
center areas, center classified by prod-
streets, residential uct category
areas ...
Size:
medium

42
Chapter 3 Distribution channels in
modern trade

Revenue growth of key players in mom

& kids store
3000

2452
2500

2000
Billion VND

1566

1500

1000 922

529

500

114

0
2015 2016 2017 2018 2019

Year

Concung

Source: Annual report of Concung.com

43
 Modern trade: KEY TO FUTURE GROWTH

How GEN Z and Millennials

are shaping the future of the Vietnam retail market.

Gen X (41-56
The age of consumers is one of the most Others
years old)
(1965-1980)

influential factors that may lead to a shift of 25% 20%

marketing strategies of the Vietnam retail

market. Currently, there are three groups of
age that have the biggest influences on this
industry such as Gen X, Millennials, Gen Z, Millennials
(25-40 years
old) (1981-
with the following ratio Gen Z (9-24
years old)
1996)
26%
(1997-2012)
29%

Gen X plays a major role in the current retail market, they often
choose traditional distribution channels such as markets, grocery
stores,... because of their traditional shopping habits. However,
modern trade channels including supermarket, minimart, CVS,...
is gradually being selected and accounts for a large part in the
total revenue of the retail market, that shift is the result of the
influence of Gen Z and Millennials (referred to as “pioneers” follow-
ing) on the retail market. The most important thing is that “pio-
neers” not only impact on the retail market trend themself but
also make the change in the place where Gen X shopping. For
example, if you look at the influence behaviours of Gen X, they’re
much more likely to be influenced by the younger people around
them. So as they listen to what their kids talk to them, they’re
being influenced about what and where to buy something. “Pio-
neers” have specific habits in shopping, they prefer convenience,
promptitude and cleanliness. Those factors are the advantages of
modern trade channels over traditional ones. All of these things
will create a change in the structure of this market.

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Modern trade: KEY TO FUTURE GROWTH

Health is one of the biggest

consumers’ concentrations in shopping.

A lthough health has been the top priority in Vietnam for four con-
secutive years, in the first quarter of 2020, 49% of Vietnamese consum-
ers registered health as their key concern, up 4% compared to the last
quarter of 2019 (according to the latest Nielsen report). As such, Viet-
namese customers are searching for items made with high quality
ingredients and containing nutritional supplements in compliance
with the highest safety criteria. Covid-19 has introduced improvements
in customer preferences and patterns in purchasing that can be
reflected in the rise in the importance of nutritious goods as well as
the development in non-perishable products. It would make consum-
ers feel safer to shop in modern trade chains since most of the goods
sold here have a clear origin, ensuring food hygiene and protection.
Supermarkets and minimarts are taking this as their competitive ad-
vantage over traditional markets.

Buying in a supermarket brings more benefits.

I n any competition, the more satisfaction a party gives to the people,

the more customers that party will get. Customers who shop in
modern distribution channels will have a better shopping experience
than traditional distribution channels. First of all, fixed price is an im-
portant issue when it comes to this topic, the fixed price will create
more customer confidence that they will not be challenged to the
price too high, moreover, customers spend much less time shopping
because they don’t have to bargain every single product like when
buying in a wet market.

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Modern trade: KEY TO FUTURE GROWTH

Buying in a supermarket brings more benefits.

Secondly, promotional policies for customers are very diverse, bring-

ing many benefits for them such as vouchers, discount cards, birthday
presents,... No matter how worthy these gifts are, customers will defi-
nitely feel that they are interested and will be more loyal to their
choice. Last but not least, convenience and promptitude of modern
trade distributions channels will create more customer confidence as
well as satisfaction when buying.

Non-cash payment is increasingly pervasive.

W ith multi- dimensional features available on smartphones these

days, enabling users to make payments through mobile phones has
become critical. Paying via visa, master card, e-wallets ... brings many
benefits to both customers and businesses, more specifically, cus-
tomers will not have to worry about whether they bring enough
money for shopping or not, because the payment is performed only
with a swipe of the card, the total amount of bill will be deducted
directly from the card or debit account,... this will create a comfortable,
safe and convenient experience for customer. Moreover, during the
COVID 19 epidemic, the non-cash payment is encouraged more than
ever, it shows such superiority over cash. Supermarkets, minimarts,
CVS,... were the first business models to accept non-cash payment.
When compared to other opponents, this is a major advantage.

42
CONCLUSION
E ven though traditional retail
channels still have the biggest share
in Vietnam’s retail market, the figures
have somewhat saturated. Modern
trade, however, has been currently on
the rise and through the datas provid-
ed, it shows no sign of stopping. With
a more systematic and chain-priori-
tized approach to logistics operation,
which may include inventory, trans-
portation, distribution, etc. these new
kinds of channels are favored by most
people.
But still, as an emerging form of retail,
there exist barriers, which are not so
small, on the way to dominate the econ-
omy’s market. Modern trade channels
are not within the rural’s grasp as the
coverage level, by the meantime, has
only concentrated on the urban and
suburban areas. Buying behaviour, for
instance, is one of the factors that play a
big role in determining this coverage
share.
That being said, although there are a lot
of difficulties, modern trade has so far
shown great prospect for improving the
national economy market, as well as the
players and parties involved.
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